Vivek Joshi is the founder and CEO of Entytle, Inc. He is a veteran of the Industrial economy and has decades of experience in industry.
Every couple of weeks, I run into a very specific scenario of a very specific type of industrial leader who is keen on implementing an installed base management system.
A few years ago, most of these aftermarket leaders were leading their simple life—their customers were locked in; they would call when they needed something serviced, and someone was always available to take orders. The aftermarket leader had to drive just the bare minimum growth year on year and all was fine. But, a lot has changed in the last few years. I find that customer buying behavior has changed—they buy less because their own businesses are struggling, or they are a lot more demanding and particular about every part and service they procure from their OEM. Quite a few industrials changed hands—going from one investor group to another or even being acquired for the first time. Life as the aftermarket leader knew it in the previous decades is no more.
Today, I find that the typical aftermarket leader is more likely to have their bosses breathing down their necks or an investor group that is pushing for higher margins through increased aftermarket parts and services. Their leadership has recognized that harnessing their installed base potential and focusing on the aftermarket is the path to profitability (and higher margins) in this economy. Their customers are willing to extend the life of the equipment with more parts and services, rather than go for massive upgrades on new equipment purchases. And finding customers is easier said than done, and their existing tech doesn’t quite do the job. So they reach out to vendors like us.
And every couple of weeks, after hearing them out, I politely and firmly turn a few of them down—I can’t, in good conscience, sell you an Installed Base management system, I say. Some bit of stunned silence and disappointment, which then leads to a more nuanced conversation about the reasons why I turned them down usually follows this. Their initial feelings are justifiable. In an enterprise sales setting, the vendor rarely carries leverage over the buyer. So, why do I or my team choose to not sell when we know fairly well that the buyer will sign on the dotted line?
The reason lies in what we have learned over the years working with Industrial OEMs of various sizes. We have distilled these learnings into what we internally call the Aftermarket Growth Framework. What’s interesting is that the framework works for Industrials of any size, and we have never been wrong before.
Here’s where I should reveal one of our success secrets: While most vendors qualify customers based on vendor-driven qualification criteria such as Budget, Authority, Need, Time (BANT), we qualify customers based on buyer-driven qualification criteria. We do the solution evaluation for them before they have even thought about it. And we do it based on two key factors that we have figured out over the years—organizational maturity and leadership motivation.
In my last article for Forbes Councils, I made the case for OEMs to focus on their installed base and suggested five ways in which they could make headway in their own selling initiatives. These prescriptive steps were based on my experience with customers over the last decade. The feedback I received was encouraging, with several industrial leaders suggesting I put in a lot more specificity. Afterall, having overseen major installed base and aftermarket project implementations for customers over the years, I knew exactly what worked and what didn’t.
So, here I lay out the public definition of the Aftermarket Growth Framework.
What is the Aftermarket Growth Framework?
The Aftermarket Growth Framework represents an industrial OEM’s capability to serve their installed base proactively and predictively. The Framework itself is extremely simple and rates an organization based on two quadrants—Organizational Maturity on the x-axis and Leadership Motivation on the y-axis. The four boxes of this “2×2” help to understand and characterize the readiness of an OEM to make the change to driving proactive Aftermarket sales.
Any organization, when put on this framework, will fit in one of four areas of the quadrant based on:
• Leadership axes: motivated vs non-motivated
• Organizational maturity axes: high vs low
The highest probability of success remains with the organization where both the leadership is motivated and organizational maturity is high. On the other end of the spectrum, when leadership is non-motivated and organizational maturity is low, you will find a 100% failure and abandonment rate.
In the other cases, the industrial OEM requires specific help—both in assessing their current gaps, as well as in fulfilling those gaps.
You might’ve figured out by now that it’s the red ones that I actively dissuade from buying our solution or even building it themselves. The logic itself is simple: we are here to design and deliver success for our customers. If we see a gap in their current preparedness, we call it as it is. After all, would you give a rookie driver the keys to a high-performance car? Or would you wait until that driver is trained and certified before they get behind the wheel of this car? Know the answer; why should you expect anything different in the implementation of major initiatives like installed base selling?
I will follow up this article with a deeper dive into what each axis of the framework quadrant means. Any installed base initiative requires precious organizational resources and promises millions in aftermarket revenue. Industrial OEMs can’t afford to improvise these projects as they move forward, or worse, leave it to chance.
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